Prospects often ask their Sofer Advisors business valuation expert how our valuation firm can play a key role in their business’ future. They may expect answers related to tax services, compliance risk, and M&A consulting. But one of our answers can take entrepreneurs by surprise. An expert business valuation from our team can contribute directly to your… legacy.
Of course, legacy can connote different things to different business owners. For some, it’s about keeping operations in the family. America’s oldest distiller, Laird & Company, is a prime example. Robert Laird served in the Revolutionary War under George Washington. The latter actually requested the soldier’s recipe for Applejack, a fruit brandy made with apples. The soldier was only too happy to share the recipe with his Commander in Chief. Later, he founded a commercial distillery in 1780. After 300 years, now the eighth generation of the Laird family still controls the company.
Now that is a legacy!
Laird isn’t alone. If you use Ziploc bags or Saran wrap in the kitchen or clean your bathroom with Scrubbing Bubbles, those products come from S.C. Johnson, now in its fifth generation of family ownership. For other leaders, one’s legacy may be best served via the survival of the company—even if it’s not under family control. To this point, America’s oldest active business, perfume and soap maker Caswell-Massey, was founded in 1752 and now owned by a private equity firm.
No matter how you contemplate your own legacy, the time to think about it is now—not when you are ready to retire. There’s a common interview question we’ve all answered: “Where do you see yourself in five years?” Sofer Advisors believes business owners should put a spin on that query, asking themselves, “Where will my business be five years after I retire?”
And this is where our business valuation services really begin to shine.
You see, building your own legacy requires looking ahead with strategic planning. Those plans that stand the test of time are based on solid facts. They also minimize assumptions. The right company valuation achieves all this by discerning the current value of your business. Just as importantly, the valuation process defines those factors driving that value, aptly pinpointing areas where strategic planning is most critical.
Correctly documenting your business’s strengths and weaknesses helps to create a guide for increased valuation and ongoing success. In fact, Sofer Advisors’ valuation methods often impress our clients so much they continue our engagement, developing a roadmap for the future and even executing action items arising from this planning exercise. The key message? Weaknesses in your business today needn’t hold back your business when you retire.
Also, even if you’re not concerned with keeping your business in the family, an accurate and defendable business valuation can be critical to selling your firm. But a valuation isn’t just about M&A consulting concerning sale price and/or other terms. Many transactions include a contingent consideration orearnout provision. In such cases, your business must continue to thrive under its new ownership for you to receive the maximum payout and avoid earn-out liabilities. The best way to ensure your business thrives in the years after you retire is to hand over a well-oiled machine that’s been fine-tuned in partnership with Sofer Advisors.
To be sure, how your business continues after you retire is only one form of legacy. Another that’s always top of mind for business owners is how they can protect the wealth their hard work has earned them over their career. Many owners find the best way to safeguard their family’s legacy is to shift assets (including their ownership equity) out of their estate and into a trust.
This has multiple immediate benefits.
Establishing a trust can save owners like you millions in tax liabilities. It can also stop creditors from seizing assets because the trust owns your company—not you. An immediate business valuation can be just as important in this situation as it is when planning for your company’s future. Why? A certified valuation now is better for your trust than in future years when the value has increased—and you are closer to exiting.
Ultimately, whether you dream of establishing the legacy of a long-running family business, or just want to secure your wealth from predators waging lawfare, collaborating with Sofer Advisors to determine your company’s true value and how to reach the valuation you desire is the best first step you can take. Contact us today for your free consultation so we can build the foundation for your legacy.
David Hern is the founder and chief executive officer of Sofer Advisors, LLC focusing on business advisory services related to litigation assistance, estate and tax planning, and business enterprise valuations for various privately-held and public companies. He is a qualified financial analyst with a proven ability to simply and clearly communicate analysis to boards of directors, presidents and CEOs, CFOs, controllers and private equity portfolio managers. David has been recognized for enabling organizations to determine their enterprise and equity value for a variety of situations including strategic planning, sale or IPO, mergers and acquisitions, financial reporting (common stock, stock options grants, purchase price allocations, impairment analyses, etc.) and tax compliance (estate & gift, 409A, NUBIG). Industry experience includes, but is not limited to, professional services, business service, healthcare, information technology, financial services, and manufacturing & distribution.
